I. The trachea and esophagus have a common origin evolving from the foregut endoderm during early embryonic development. These epithelia undergo a series of well-defined structural changes involving differentiation of progenitor cells into several cell types that ultimately result in the formation of the mature epithelium. In this study, we monitor the expression of p63 in the esophageal and tracheobronchial epithelium at several stages during development and determine the effect of the lack of p63 expression on the morphogenesis of these epithelia in p63-/- mice. At day E15.5, the esophageal and tracheobronchial epithelium contain 2-3 layers of cells; however, only the progenitor cells express p63. The progenitor cells differentiate first into ciliated cells (p63-/b-tubulin IV+) and at birth into basal cells (p63+/K14+/BS-I-B4+). In adult mouse and human, the lining of the esophagus matures into a (non)keratinizing, stratified epithelium while the tracheobronchial lining develops into a pseudostratified, columnar epithelium containing basal, ciliated and mucosecretory cells. In mature epithelia, the K14+/BS-I-B4+ basal cells are the most intensely stained for p63. Expression of p63 is dramatically repressed during squamous differentiation in vivo or in cultured cells. Generally, human squamous cell carcinomas stained strongly while human adenocarcinomas did not stain for p63. In contrast to the esophagus and trachea from wild type mice, the esophageal and tracheobronchial epithelium from newborn p63-/- mice consist largely of a columnar, ciliated epithelium that appear to lack basal cells. Our study indicates that p63 is critical for normal morphogenesis of the esophageal and tracheobronchial epithelium. In p63-/- mice, progenitor cells are able to differentiate into ciliated cells but do not appear to generate basal cells suggesting a role for p63 either in the regulation of the differentiation of progenitor cells into basal cells or in the survival of basal cells. II. Retinoids play an important role in the tracheobronchial epithelium. Retinoids can act via nuclear retinoid receptors or through other mechanisms. The synthetic retinoid 6-[3-(1-adamantyl)-4-hydroxyphenyl]-2-naphthalene carboxylic acid (AHPN) can act both activate RARgamma and act by receptor-independent mechanisms. We have analyzed the effect of several retinoids on the expression of non-steroidal anti-inflammatory drug-activated gene (NAG-1) in normal human tracheobronchial epithelial (HTBE) cells and several lung carcinoma cell lines. The retinoid AHPN greatly enhances the expression of NAG-1 mRNA and protein in a time and dose-dependent manner in human lung adenocarcinoma H460 cells and several other carcinoma cell lines. This induction was specific for AHPN since retinoic acid, an RAR- and an RXR-pan-agonist were unable to induce NAG-1 suggesting that this induction is not mediated through activation of retinoid receptors. Although NAG-1 is a p53-responsive gene, AHPN-induced NAG-1 expression does not require p53. The induction of NAG-1 expression by AHPN is at least in part due to a 8-fold increase in the stability of NAG-1 mRNA. In contrast to carcinoma cells, NAG-1 expression is effectively induced by retinoic acid and the RAR-selective pan-agonist in normal HTBE cells and accompanies the inhibition of squamous differentiation and the initiation of normal differentiation. In vivo, NAG-1 expression was observed in the normal tracheobronchial epithelium while no expression was found in either squamous metaplastic tracheal epithelium or in sections of human lung tumors. Our results suggest that the induction of NAG-1 expression by retinoids in normal HTBE and lung carcinoma cells is regulated by distinct mechanisms and is associated with different biological processes. The linkage between AHPN treatment and NAG-1 expression revealed in this study provides a new mechanism for the anti-tumorigenic activity of AHPN.